Insight and Commentary on Business Legal Issues

Internships

As summer begins, many employers start hiring interns. While some internships will be paid, many more will be unpaid. But, are unpaid internships a thing of the past? Maybe.

Several employers have recently found out the hard way that unpaid internships can mean lawsuits and plenty of money spent on attorneys’ fees and costs.

In 2011, Fox Searchlight was sued by several interns who worked on the set of Black Swan. The lawsuit claimed that the interns were improperly classified as unpaid interns. The lawsuit sought damages for violations of the minimum wage and overtime laws. Recently, the Judge presiding over the case ruled in favor of the interns determining that they were improperly classified as unpaid interns and were employees.

Following on the heels of that decision, two former interns of Conde Nast sued also claiming that they should have been paid as employees. The Conde Nast case is filed as a class action and seeks to recover unpaid wages, interest, and attorneys’ fees and costs.

As discussed in prior posts, in 2011, the Department of Labor (DOL) began cracking down on companies that were not properly classifying interns. The DOL created criteria for determining whether an internship should be paid. Of those criteria, ensuring that the employer derives no advantage is perhaps the most difficult to meet.

For some employers, the recent lawsuits, the DOL’s stance on the issue and recent crack down is enough for them to end their internship programs. For those employers, however, that have made the decision to continue hiring interns, especially if unpaid, caution should always be exercised in classifying the intern. If the intern is doing work typical of a paid employee or the employer is questioning whether the internship meets the established criteria, the internship should probably be paid or the employer should beware.